What is Commodity Trading in India?

Commodity trading in India refers to buying and selling commodity-based futures contracts (derivatives) through recognised commodity exchanges, such as Multi-Commodity Exchange of India (MCX) and National Commodity & Derivatives Exchange (NCDEX). 

It offers traders exposure to commodities such as:

• Gold
• Silver
• Crude oil
• Natural gas, and 
• Agricultural commodities.

Generally, commodity futures involve leverage and margin requirements.

How to Trade Commodities MCX?

Traders can buy and sell commodity derivative contracts listed on the MCX. You are usually required to open a “commodity trading account” with a broker that provides MCX access.  

After opening the account, the trader can:

• Select a commodity such as gold, silver, crude oil, or natural gas
• Choose the relevant futures or options contract, and 
• Place a buy or sell order.

Each contract has a specified lot size, expiry date, and tick value. Profit or loss depends on the change in the contract price, while brokerage, exchange charges, taxes, and other applicable costs also apply. 

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